Wednesday, July 30

growing to (heart) $4 gas

As I started my day with a read of the New York Times* I noticed:
"Oil has dropped more than $23 a barrel, or 16 percent, and gasoline prices have fallen as Americans drive less."
Conservatives Small brainers will attribute this to Dubya's threat to open up more offshore drilling (even though the oil companies haven't drilled in 80% of the areas already permitted for same). The truth is that prices fell when the magical $4/gallon barrier for gas/petrol was reached and demand eased -- Americans simply started driving less. Part of this has to include the economic meltdown that's underway - just yesterday another restaurant chain (Benigan's/Steak & Ale), and another department store chain (Mervyn's) failed.

Dubya's Oil Puppets would like you to believe otherwise, but the offshore drilling threat was hollow and had no impact. This drop in oil prices was based on sticker-shock, and is temporary.

Oil producers know that "$4 gas" will soon become accepted as the norm, at which point they can aim for "$5 gas". I heard some MSM pundits muse "now we're paying European prices for gas!!!!" while anyone who can Google knows that's a lie; many Europeans would love to see American gas prices at their local station.

I suspect this will be similar to any plateau effect; Americans will grow to think of "$4 gas" as The Good Old Days and behaviors will slip away from our New Thrifty Habits:
  1. driving at the speed limit;
  2. combining trips;
  3. carpooling;
  4. buying more efficient vehicles;
  5. using mass transit
The local bus/train company (DART) has placed orders for larger trains - with better bicycle capacity - but by the time those orders arrive, I suspect we'll be back to Business As Usual as we'll have adapted to stagflation.

Likewise, American car makers are falling over themselves as they try to retool their factories for more fuel-efficient vehicles, but it appears they cannot turn on a dime and I've heard predictions of 18 months before those adaptations are complete.

I was talking to a friend last night about the price of new cars, and she said that while her paycheck has stayed the same, the price of her Target New Car has increased - on the order of 10% or so. My theory is that in order to make a vehicle 1% more fuel efficient, the price had to increase by 5% - the law of diminishing returns has begun to set in. As Americans return to our wasteful habits (outconsuming the world by 5:1 in some cases) this is only bound to get worse.
* the local newspaper (the "Dallas Managed News") has become little more than a repurposing of Associated Press stories, plus a hefty Religion section and right-wing pundits. They shouldn't let the door hit them in the arse.

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